Beaten: Why Chevrolet drove out of India

Yet another storied car brand, immortalised in film and song, proves that when it comes to India, it is all too mortalRavi Balakrishnan | ETBrandEquity | June 07, 2017, 06:00 IST

(Getty Images)For many customers and dealers of General Motors, the company’s decision to retire Chevrolet in India, came as a shock. Showroom owners were irate according to news reports: they’d not been informed and some were even awaiting a revitalised Beat.

But the most telling fact is the total lack of surprise from Chevrolet’s rivals. Even if some of the sapience is overstated, there was writing on the wall, for those who cared to see it.

Signs apart from the well-documented shutdown of the plant in Halol, and the decision to cut-back investment. Praveen Kenneth, co-owner, chairman and MD, L&K Saatchi & Saatchi admits, “I was not overtly surprised to see General Motors go because they have been struggling for a long time.” Kenneth whose agency works on Renault, which staged a successful comeback in India with Duster and Kwid, adds, “The revolving CEOs just didn’t help. You need unchanged leadership of at least 5-6 years to ensure strategy and vision is executed.”

GM’s troubles are by no means unique. India is among the world’s fastest growing auto markets, but also notoriously difficult to crack. According to figures from the Society of Indian Automobile Manufacturers SIAM for April 2017, Maruti Suzuki dominates with a 51.9% share followed by Hyundai at 16.12%. Some of the world’s most storied brands have run out gas, had to take long pit-stops and either returned — like Fiat and Renault — or never bothered returning, like Peugeot. GM is just the latest addition. Here, according to experts, is what caused it to steer of course.

It launched the wrong cars at the wrong time

GM’s first salvo was Opel, launched in 1996. Says marketing consultant and author Anisha Motwani, who would go on to head marketing at General Motors in the mid-2000s, “Vectra was very sophisticated, fully computerised but ahead of its time, keeping in view bumpy, potholed Indian roads. And this was true of all three Opel brands: great products, wrong timing.”

Right timing would continue to elude GM. As Indian consumers got more demanding GM’s lack of investment in technology led to an aging portfolio. By contrast, RS Kalsi, executive director – sales and marketing, Maruti Suzuki, says, “We’ve been destroying previous models and processes and going for new ones. Many models were discontinued even when they were doing well because we decided we’d go in for something better.”

It couldn’t keep up with the Indian consumer

The auto consumer in India is a paradox: at once, extremely value conscious and very demanding. Mayank Pareek, president – passenger vehicles business, Tata Motors says, “They want more for less, if not for free! But at the same time, they are willing to pay for something truly life changing.” Customers paid for air conditioning, power steering and Pareek believes, automatic transmission will be the next big thing. But the same consumer balks at forking out for bells and whistles. Pareek’s theory on why global brands flounder: “Probably they try to bring global solutions here. But the market is so big, it needs and deserves solutions tailored for it in terms of product, service and the way you connect with dealers.”

Indian cars sell by word of mouth and Chevrolet couldn’t get a word in edgeways

Indian auto purchases tend to be consensus driven. Even before a car has been bought, discussions abound over its potential resale value. Sajan Raj Kurup, founder and creative chairman at Creativeland Asia, who currently handles Mercedes, observes, “The middle class population is risk averse. Much more than what an ad says, what your neighbour drives and your uncle recommends, has an impact.”

The cars were tough to maintain (or at least that’s the impression customers were left with)

A car purchase in India is fraught with anxieties about service. Logic dictates an already popular model equals buying into an inexpensive pipeline of after sales service. Which explains why several car manufacturers from Skoda to Ford have made the low cost of maintenance and ownership a key communication peg, of late. GM took a bash at this too with the Chevy Promise campaign late last decade, fronted by its then MD Karl Slym. But when it came to GM, Motwani recalls, the troubles began around the launch of Opel which was saddled with a reputation of expensive German spare parts and high cost of service. These impressions never left the brand. Hyundai on the other hand prides itself on service. Says Puneet Anand senior general manager - marketing, “We’ve serviced 55 lakh cars through 1255 centres. Some of our products like Santa Fe or Elantra have a three year unlimited mileage warranty: there’s not a penny paid on maintenance.”

Its exit is going to make re-entry difficult

An auto industry vet believes making a comeback is going to be difficult, considering the impact of Chevrolet’s departure on its customers and dealers. In spite of the company’s assurances, there is bound to be anxiety among Chevrolet owners, say industry experts. Ford which shares Chevrolet’s country of origin has grappled with some similar issues but remains committed. According to Anurag Mehrotra, managing director, Ford “We are making progress on product led innovation, delivering differentiated customer experience and busting the myth of cost of ownership. 2016 was a year of growth: our local vehicle sales grew 12%, much faster than the industry which grew about 6%.”

Like most places worth getting to in India, the road to auto dominance is bumpy and chaotic. It’s perhaps only fitting that a few choose a smoother, more predictable ride.